UPSC Exam Comprehensive News Analysis Sep21

F. Tidbits

• State-owned Bharat Petroleum Corporation Limited (BPCL) has sought the government’s nod for threefold expansion of its Numaligarh refinery in northeast from 3 million tonnes per annum (mtpa) to 9 mtpa at a cost of ₹22,000 crore.
• The company has sought capital subsidy and excise concession from the government for the refinery project.

Why?

• The double-digit rise in fuel consumption in the northeast, one of the highest in the country, has propelled this expansion.
• Northeast is strategic for the government.

Export

• The company also plans to export products to Bangladesh, Nepal and Myanmar with the refinery expansion.
• Numaligarh refinery is pursuing plans to lay a 135-km petroleum product pipeline from its terminal at Siliguri in West Bengal to Parbatipur in Bangladesh.
• Bangladesh will be a big market besides catering to the northeast, where demand in growing in double digits.

• E-commerce firms will from October 1 have to deduct 1% tax collected at source (TCS) before making payments to their suppliers.
• The Finance Ministry has notified TCS at the rate of 0.50% of the net value of intra-State taxable supplies made through e-commerce portals by other suppliers in the Central Tax law.
• States too would follow suit and notify levy of 0.50% SGST on intra-State supplies.

• The proposed merger of three public sector banks, Bank of Baroda, Vijaya Bank and Dena Bank, is expected to result in better operating efficiency in the long run but there could be an increase in slippages in the short-term, India Ratings has said.

Observations

• The rating agency said the merged entity may see reduced operating costs, lower funding cost and strengthened risk management practices apart from increasing the scale and reach moderately.
• However, in the short-term, the slippages could increase as recognition of non-performing assets is harmonised and accelerated.
• India Ratings said the proposed merger would require significant bandwidth of management along with deft handling so that operational aspects such as business growth and resolution of large stock of delinquent assets continue receiving adequate attention.
• It also said the asset-liability mismatch of the smaller banks (Vijaya and Dena Banks) can be better addressed at the consolidated level.
• The success of the proposed merger could impact the incremental capital ask from the government as efficiencies improve, resulting in stronger internal accruals and may act as a roadmap for further consolidations in the public-sector banking space.
• India Ratings further said the consolidated entity’s core equity tier 1 capital is about 9.3% and that Dena Bank’s lower capital buffers are offset by Vijaya’s higher capital buffers.

• Reserve Bank of India Governor Urjit Patel emphasised on preventive vigilance for improving governance standards in public sector enterprises (PSEs) and said punitive vigilance may not achieve the desired results.

Observations

• He said preventive vigilance takes centre stage and becomes a key effective tool of governance in a public-sector institution.
• When lapses can arise due to background noise outside of the employee control (which is often the case in public sector due to the complexity of the interaction with a multitude of other public-sector entities), punitive vigilance becomes even less attractive due to further demotivation that it might induce; in turn, so does detective vigilance.
• While not taking away from the need to engage in some detective and punitive vigilance, preventive vigilance is conceptually likely to be the most effective governance mechanism at public sector institutions.
• The Governor said that punitive vigilance was difficult in a public-sector institution for several reasons, adding the rewards were low to start with, thereby limiting the possibility of downward revisions.

• The Securities and Exchange Board of India (SEBI) wants the government to amend the Income Tax Act to plug loopholes wherein individuals and companies managed to avail tax benefits on the money paid to the regulator to settle matters under the consent mechanism.
• The regulator had already taken up the matter with the government highlighting cases where entities showed the settlement amount paid to the SEBI as a deductible business expense to lower their taxable income and thereby the tax liability.
• A committee formed to review consent framework has highlighted this issue.

Past instances

• The past has seen at least three instances wherein such a tax benefit was availed by entities that settled their respective matters with the SEBI through the consent mechanism that involves paying a monetary penalty.
• In February 2016, the Income Tax department allowed Anil Ambani to treat ₹50 crore paid as settlement charges to the SEBI as an expenditure. Later on, the I-T Appellate Tribunal upheld the observation of the tax department.
• In other two instances, Pranav Securities and Reliance Share & Stock Brokers claimed such similar tax benefits.
• The premise put forth by the tax authorities was that the settlement amount was not a penalty and the money had been paid without admission of guilt.

Arguments

• A section of experts, meanwhile, believe that companies should be allowed to treat the settlement amount as an expense since such pay-outs are part of the compliance cost.
• From a company perspective, it should be allowed as an expense since there are hundreds of compliance requirements for a company.
• And errors should be allowed as a business expense, much like business errors which have a cost.
• But if the matter relates to fraud or misrepresentation or there is a personal liability then the company should anyway not be asked to pay and the individual should be liable.
• Interestingly, such settlement amounts are non-deductible under U.S. laws where the Securities Exchange Commission has clearly laid down that applicants cannot seek any kind of tax credit on such amount paid to the regulator.

• Saudi Arabia will be the third strategic partner of the $50 billion China-Pakistan Economic Corridor (CPEC), a senior Pakistani Minister has announced.

CPEC

• The CPEC is the flagship project of the multi-billion dollar Belt and Road Initiative (BRI), a pet project of Chinese President Xi Jinping, aimed at enhancing Beijing’s influence around the world through China-funded infrastructure projects.
• The CPEC is the fastest-moving and flagship project of President Xi’s global Belt and Road Initiative (BRI).
• The CPEC aims to construct and upgrade the transportation network, energy projects, a deep-water port at Gwadar and special economic zones to eventually support Pakistan’s industrial development as a manufacturing hub by 2030.

Pakistan

• Pakistan has assured the Saudi leadership that they will continue to provide security to their country and provide strategic support wherever needed.
• China has rejected accusations that its financial backing for the CPEC was a debt trap that could compromise cash-strapped Pakistan’s sovereignty.

• The Supreme Court has asked the Maharashtra government to hand over the case diary to learn how the investigation into the riots in Bhima-Koregaon village expanded to the discovery of a Maoist plot on the life of a sovereign head, leading to the crackdown on and the arrests of rights activists across the country.
• A Bench of Chief Justice of India Dipak Misra and Justices A.M. Khanwilkar and D.Y. Chandrachud reserved for final orders on Thursday a petition filed by historian Romila Thapar and four others for a Special Investigation Team to probe the circumstances leading to the raids and the detention of poet Varavara Rao, lawyer Sudha Bhardwaj and activists Arun Ferreira, Vernon Gonsalves and Gautam Navlakha.
• Maharashtra, which has accused them of links with the banned Communist Party of India (Maoist), assured the court of an impartial probe.

• India has accepted Pakistan’s proposal for talks between the Foreign Ministers on the sidelines of the ongoing annual UN General Assembly session in New York.
• Pakistan is seeking resumption of the Comprehensive Bilateral Dialogue stalled after the January 2016 terror strike on the Pathankot airbase.
• India’s response came within hours of the news that Pakistan Prime Minister Imran Khan proposed talks between the two senior Ministers.
• However, India said the talks would not be aimed at a broader scheme of dialogue.
• The MEA spokesperson emphasised that despite agreeing to the meeting, India stuck to its position that talks and terror could not go together.
• However, the issue of Pakistan facilitating visits by Indian pilgrims to the Kartarpur Sahib gurdwara is expected to feature at the meeting.
• The MEA spokesperson said India’s position on joining the SAARC summit in Islamabad remained unchanged as the atmosphere in the region is not conducive. Under the shadow of cross-border terrorism, it is difficult to hold the summit that is to be hosted by Pakistan.

• Himachal Pradesh has digitised all State gazettes from the year 1953 to 2007.
• The printed gazettes from 1953 to 2007 have been digitalised, indexed and uploaded online in the public domain by Himachal Pradesh Secretariat Library.
• The gazettes from 2007 onwards have already been published online.
• The State gazettes were published in both Hindi and English.

• The Punjab Cabinet gave its approval to rules for implementation of the Punjab Fiscal Responsibility and Budget Management (FRBM) Act, 2003.
• The move will help the State achieve specific fiscal targets within a stipulated time period to avail of the benefits of the Centre’s Debt Consolidation and Relief Facility for States.

Background

• The Act was framed by the Centre on the basis of the model draft bill circulated by the Reserve Bank of India, suitably amended from time to time.
• As per the recommendations of the 14th Finance Commission, each State is compulsorily required to enact a fiscal responsibility legislation to realise the desired targets.

• Union Minister Kiren Rijiju has assured the Arunachal Pradesh government that an inter-ministerial team will visit East Siang district soon to assess the damage caused by the recent floods.
• The team of experts will be visiting the district and file a report, based on which plans will be made to tame the Siang river.

Background

• The Siang river, which originates in Tibet, was in spate in August and September due to heavy rain in China.
• Over 1,000 families living in the catchment areas of East Siang district were affected in the flood.

Siang river

• Brahmaputra river is called Siang in Arunachal Pradesh.
• There is a deep concern over the issue of large-scale siltation on Siang riverbed and erosion of catchment areas.
• People had to flee their homes after the marauding flood waters of Siang entered their villages.
• The river water was turning muddier and its flow more turbulent with time, adding to the anxieties in the minds of people.

• Many schools are now providing insurance cover for their students to safeguard against accidents and other unforeseen circumstances.

Why?

• The move comes after the Council for the Indian School Certificate Examinations (CISCE) issued a circular asking all schools affiliated to the Council to provide insurance cover for their students.
• Students participate in numerous extracurricular activities, besides the normal academic calendar. This, involves practice, plenty of movement, and much travel time to school and back home. This leaves them vulnerable and prone to likely mishaps, accidents, or any other unforeseen circumstance.

Cover of ₹1 lakh

• The Council has also suggested that the policy value per student be ₹1 lakh.
• While it recommends this measure for all students, the Council has said that insurance will be mandatory for students who are participating in the School Games Federation of India 2018-2019.
• While school managements have welcomed the move, a section of parents have objected. The aim of the school is to take all measures to ensure that no accident happens. They cannot wash away their responsibility by simply providing insurance cover.

G. Prelims Fact

• Fighting global warming will necessarily require taxing carbon emissions or setting a price on carbon pollution.
• At least 46 countries and 26 sub-national governments have established a carbon pricing policy as of April 1.

How?

• There are several paths governments can take to price carbon, all leading to the same result.
• They begin to capture what are known as the external costs of carbon emissions – costs that the public pays for in other ways, such as damage to crops and health care costs from heat waves and droughts or to property from flooding and sea level rise – and tie them to their sources through a price on carbon.

Why?

• Climate change is one of the greatest global challenges of our time. It threatens to roll back decades of development progress and puts lives, livelihoods, and economic growth at risk.
• A price on carbon helps shift the burden for the damage back to those who are responsible for it, and who can reduce it.
• Instead of dictating who should reduce emissions where and how, a carbon price gives an economic signal and polluters decide for themselves whether to discontinue their polluting activity, reduce emissions, or continue polluting and pay for it.
• In this way, the overall environmental goal is achieved in the most flexible and least-cost way to society.
• The carbon price also stimulates clean technology and market innovation, fuelling new, low-carbon drivers of economic growth.

Types

• There are two main types of carbon pricing: emissions trading systems (ETS) and carbon taxes.
• An ETS – sometimes referred to as a cap-and-trade system – caps the total level of greenhouse gas emissions and allows those industries with low emissions to sell their extra allowances to larger emitters. By creating supply and demand for emissions allowances, an ETS establishes a market price for greenhouse gas emissions. The cap helps ensure that the required emission reductions will take place to keep the emitters (in aggregate) within their pre-allocated carbon budget.
• A carbon tax directly sets a price on carbon by defining a tax rate on greenhouse gas emissions or – more commonly – on the carbon content of fossil fuels. It is different from an ETS in that the emission reduction outcome of a carbon tax is not pre-defined but the carbon price is.
• There are also more indirect ways of more accurately pricing carbon, such as through fuel taxes, the removal of fossil fuel subsidies, and regulations that may incorporate a social cost of carbon.

• The Aircraft Accident Investigation Bureau (AAIB) is a division of the Ministry of Civil Aviation, Government of India which investigates aircraft accidents and incidents in India.

Background

• Earlier, the Directorate General of Civil Aviation (DGCA) conducted investigations and gave information to the investigations established by the Court of Inquiry and the Committee Inquiry.
• A separate investigative agency was established to comply with the Standards and Recommended Practices (SARPs) of the International Civil Aviation Organisation (ICAO).
• The agency was established in 2011.
• The Aircraft (Investigation of Accidents and Incidents) Rules, 2012 came into effect on 5 July 2012.
• It provides for setting up of an Aircraft Accident Investigation Bureau.

H. Practice Questions for UPSC Prelims Exam

1. It is an ethnic group/indigenous tribe inhabiting the states of Assam and Meghalaya.
2. They are recognized as a Scheduled tribe within the State of Assam.
3. A striking peculiarity of the Tiwa is their division into two sub-groups, Hill Tiwa and Plains Tiwas, displaying contrasting cultural features.

Which of the above statement/s is/are incorrect?

I. Practice Questions for UPSC Mains Exam